Ahead of opening a $190 million expansion built while refining margins tanked, the New Zealand Refining Company is looking for new growth opportunities.
On Friday, it will cut the ribbon on the Point Forward project that has increased its refining capacity by between 15 and 20 per cent.
The chief
executive, Ken Rivers, said he was already discussing new growth projects with the board and shareholders, the oil companies and Emerald Capital.
"I'm looking at what next. Fuel product growth continues to grow - it's gone through a bit of dip with the recession but we do see demand recovering. There is the opportunity in a couple of years for a future growth project," he said.
"The issue around that is how attractive it is, how quickly we can pay off debt [for the Point Forward project] and start looking at something more."
It would be a refining or pipeline project for the company which now processes 60 per cent of the country's petrol, 80 per cent of diesel and just on 100 per cent of jet fuel. The balance is directly imported by oil companies.
"Doing things on refineries is expensive. You've got to be ready, you've got to be aware of long lead times and always looking for the opportunity. We should always be ready."
Volatile margins pushed NZ Refining's full-year profit down 81 per cent to $23.6 million last year.
Rivers said he had expected a further "rocky"period, the refining surplus remained but so far this year there had been a recovery in NZR margins of which the company takes 70 per cent, with the remainder going to oil companies. Takes are 70 per cent of the margin, rather than 100 per cent because oil companies bear the risk of owning and transporting the crude.
At the beginning of 2009 per barrel margins were US$12 but plunged to US67c by year's end. It had recovered to around US$6 for the first four months of this year. "It's a bit of a bounce back. I'm delighted and I'm making hay while the sun shines."
The Point Forward project took two years to finish and, apart from short routine shutdowns, work had to be done around an operational refinery where about 110,000 barrels are being processed at any one time.
"There was lots of hot work going on and in the pipes there was stuff that could burn and explode," Rivers said.
The company embarked on the project as its market share was slipping. It was funded from bank debt and met criteria of a 15 per cent return on capital over a 10-year period.
PETROL PROJECTS
* Point Forward, official opening this Friday: $190 million.
* Future Fuels, finished 2005: $180 million.
* Think Big expansion, finished mid-1980s: $1.8 billion.
Planning is under way at the Marsden Pt oil refinery for new projects to expand the business. Photo / Northern Advocate
Ahead of opening a $190 million expansion built while refining margins tanked, the New Zealand Refining Company is looking for new growth opportunities.
On Friday, it will cut the ribbon on the Point Forward project that has increased its refining capacity by between 15 and 20 per cent.
The chief
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